CREATING VALUE FOR SHAREHOLDERS
CREATING VALUE FOR SHAREHOLDERS
Despite the difficult operating environment, NIPCO Plc has maintained a steady growth in profit and consistently rewarded shareholders with dividends in the last five years, writes Goddy Egene
It is an obvious fact that the operating environment has been very challenging in recent years, leading to many companies to record lower profitability or losses. Companies operating in the oil and gas industries are not left out of the negative impact of the inclement environment.
Some leading oil and gas companies have witnessed significant decline in bottom-lines, while others cut dividends to shareholders following dwindling fortunes occasioned by the difficult operating environment.
However, NIPCO Plc, a company traded on the NASD Plc, a platform for public limited liabilities firms that are not listed on the Nigerian Exchange Limited (NGX), has remained resilient and consistently rewarding shareholders with dividends.
Despite the tough operating environment, NIPCO Plc has recorded a steady growth in revenue and profit in the last five years. It recorded a revenue of N171 billion in 2016, which jumped to N280 billion in 2019. And despite the impact of the Covid-19 in 2020, the petroleum product marketing firm still grew its revenue to N288 billion in 2020. Profit before tax followed similar growth trajectory, rising from N2.2 billion in 2016 to N2.9 billion in 2019 and further to N3.2 billion in 2020. Profit after tax (PAT) printed at N1.6 billion in 2020, up from N1.4 billion in 2019.
In line with its determination to ensure value for shareholders, NIPCO Plc has maintained the payment of 300 kobo dividend per share each year in the past five years.
In a proactive move to improve its leadership position in the industry, NIPCO Plc acquired former Mobil Oil Nigeria Plc and change its name to 11 Plc. That acquisition has significantly impacted positively on the performance of the company.
Speaking on the company’s performance, Chairman of NIPCO Plc, Chief Bestman Anekwe, said they are happy with the progress the company had made over the years.
“We have continually retained the trust and loyalty of our customers by providing high quality products. This is no mean feat in view of the rapidly changing and challenging oil and gas business environment. In strengthening and expanding our Liquefied Petroleum Gas (LPG) operations through the deployment of skids across the country, we have been able to penetrate into most states of the country thereby increasing our customer strength greatly. We maintained a focus on strengthening our core businesses by continually assessing areas for improvement, making relevant investments to make certain our model remains efficient, effective and relevant,” Anekwe said.
Giving insight into the operations of the company in 2020, the Managing Director/Chief Executive Officer, NIPCO Plc, Mr. Suresh Kumar, last year was undoubtedly one of the most difficult years for the industry worldwide in the last few decades.
According to him, the year saw the COVID -19 pandemic afflict nations across the globe, necessitating lock downs borders for considerable time, thereby preventing movement of people , goods and services for months with lots of hardships on the populace.
“The lockdowns was an immense toll on many sectors of the economy, but one of the worst hit was the oil and gas industry which fuels mobility of mankind and business around the world. One of the resultant effect of the restriction was the drop in movement on air and land travels to low demand for Premium Motor Spirit (PMS) ,Automotive Gas Oil (AGO) and Jet A1 (Aviation fuel).
“With Nigeria being largely dependent on crude oil revenue, the above negative scenarios in the industry affected her economy greatly with the nation going into recession in the third quarter of the year under review.
“Nevertheless, even with the challenges, the nation’s hydrocarbon industry recorded some milestones which if improved upon could be a catalyst for great improvement in the economy and reduce dependence on oil,” he said.
However, he said that despite the challenges, NIPCO Plc was able to proactively improve on its fortunes by raising stakes in the sector especially in the gas realm and AGO, both of which are largely deregulated.
“In the LPG sub-sector, we were able to do about 35 per cent of the nation’s supply as a depot operator and supplier to marketers while in AGO, the company remains a supplier of choice by most industrial set ups. More of our LPG skids are at various stages of deployment to improve access to the product nationwide at a very competitive price.
“Our PMS receipt and sales are on course with a view to expanding our mission to expand our retail outlooks for dispensing white oil and LPG across the nooks and crannies of Nigeria is still on course. Hopefully when the product is fully deregulated the sector will be opened up for more investments which your company too would gladly partake in.
“As a fully integrated oil firm, we are ready to continue to invest in the sector under a clear fiscal environment that could guarantee appreciable returns on investment to our shareholders,” Kumar said.
Although the shock of the pandemic put a lot of pressure on the company’s human capital as they had to grapple on how to cope with the virus and keeping pace with work schedules, he said management had to devise several containment measures to ensure utmost safety of the workforce by adhering strictly to all the COVID -19 protocols as enunciated by relevant government agencies.
“It is with immense pleasure that I say that all through the 2020 year, we did not have any downtime due to the fear of the virus ,a feat I commend our staff’s dedication towards their work. We are upbeat that with the standards set in, the much dreaded virus will be properly contained in the overall interest of both the employees and you the investors,” he added.
Kumar disclosed that the company’s efforts in giving back to the society in several areas of human endeavors in line with its corporate policy in making the populace feel its existence positively was not abandoned despite the impact of the pandemic on our operations.
“Our interventions were in the area of mitigating the awful effects of the pandemic through donation to the CACOVID fund, packaged by Central Bank of Nigeria (CBN), Nigerian National Petroleum Corporation (NNPC), Department of Petroleum Resources(DPR) and others.”
“In the same vein, we facilitated in conjunction with some other companies the inauguration of 110 bed isolation centre for COVID -19 patients at Landmark Convention Centre, Oniru .We also provided of some essential facilities for the smooth running of the centre,” he said.
The CEO disclosed that in their immediate host community, hundreds of women were offered gas burners and other accessories to ease domestic cooking and alleviate poverty.
Kumar is optimistic that notwithstanding the enormous challenges in the industry, there are better prospects in 2021.
According to him, the setting up of the National Gas Expansion Programme (NGEP), to deepen domestic utilisation of gas is one of the veritable tool that can enhance the performance of NIPCO Plc in the area of gas marketing .
“With the declaration of 2020 as the Year of Gas by the federal government, the sector is expected to witness more growth to the benefit of stakeholders by exuding more confidence in investors hoping that this will to channel more funds into the sector. The renewed interest of the federal government in utilisation of natural gas as vehicular fuel through NGEP is also expected to give fillip to our company at improving on our bottom lines through the plethora of investment in providing avenues for a cheaper and cleaner alternative source of energy for Nigerians,” he said.
Still looking ahead, Kumar said another major plank in improving the fortunes of NIPCO Plc is in the area of marketing of a wide range of petroleum products the firm engages in.
“We intend to broaden our marketing horizon to ensure the company continues to take sizeable portion in product sales. Our sales volume in LPG is very encouraging, a feat we hope to replicate in white products based on the foundations laid in 2020,” he said.